Depreciation

[Thepipdoc]

This weekend while in the marina office I picked up a 2008 MBM and was suprised to see the size of the depreciation since September 2008 to now.
It seems that most makes have dipped by approx 20% ( some even more) in only 3 years.
However when I looked at a 2001 MBM, the difference from 2001 to 2008 seemed very small, just a few %.
I have to say that I didn't enter the boating market till 2009 so this depreciation I'm referring to hasn't affected me at all and without the depreciation I wouldn't have been able to afford the boat I'm about to buy in a few weeks.
I somehow feel the people that bought prior to 2008 will be taking a big hit when they sell.

 

[gravygraham]

Thats interesting - I'm in the process of buying a 2008 model. My previous boat (bought new) was an 05/06 model which I sold last summer for half it's purchase price.

 

[ontheplane]

Are you talking New to used price, or used to used....

I.e. are you comparing what a New 2008 boat cost to what it's worth now or what a 2005 boat was worth then and what it's worth now?

Be interested to know.

 

[rbcoomer]

I think the market value in many 'big ticket' items follows the housing market - positive equity=remortgage & spending power, less or negative equity=uphill struggle, fire sale and lower values. Perhaps it will be different next (boom) time around, but I doubt it. A new generation of suckers will make the same mistakes! This time around is more severe because government encouraged and indeed participated in the 'boom' and thus made for a bigger than usual 'bust'. Economic re-alignment more than true depreciation... IMHO of course

 

[volvopaul]

Hi Pipdoc, I bought in 2009 and IF my sale goes through ive taken a hit on my boat.

Its all relative as ive a budget( sum) to add to the proceeds of my sale which I hope I will get off the purchase price when I find the next boat.

Where it goes wrong is for sellers that have boats on finance that are having to give up boating due to the recessive times we now live in, everything is taking a hit for sure wether it be boats, cars, houses etc certainly nothing is an investment certainty for sure.

Boats being id say at the bottom of the pile!

Your new toy has been moved last week, ashore id guess.

 

[Thepipdoc]

Are you talking New to used price, or used to used....

I.e. are you comparing what a New 2008 boat cost to what it's worth now or what a 2005 boat was worth then and what it's worth now?

Be interested to know.

I'm talking about used boat prices.

 

[Thepipdoc]

Your new toy has been moved last week, ashore id guess.

Ahh. so they're not telling me porkies then!!
Apparently ashore right now having a couple of below the waterline bits sorted prior to going back in the wet stuff.

 

[epervier]

Interesting subject, just to throw a spanner in the works, I sold my sunseeker Portofino last April for more than I paid for it,(having owned her for four and a half years) although it has to be said, I did bring her back up to spec, with new cockpit vinyl, new 3 way battery charger & batteries, vhf, coppercoated, which was still less than the difference, which for me proves the adage condition,condition,condition. if the boat looks right, handles as she should, priced correctly, you don't have to take a hiding when selling, unless of course you just want to get out of it.

All this of course is IMHO.

 

[simon barefoot]

Ahh. so they're not telling me porkies then!!
Apparently ashore right now having a couple of below the waterline bits sorted prior to going back in the wet stuff.

Then get her surveyed whilst ashore and save on lift-out fees?

 

[Thepipdoc]

Then get her surveyed whilst ashore and save on lift-out fees?

Nah.... the bits that are getting done now are the things that the survey and sea trial identified. The next time she goes in the water will be the last time before delivery!

Me getting velly exited!!

 

[hlb]

I've got all the bills for my boat from new. New price was around seventy five grand, in 1988 or maybe nine. Since then, the price hardly moved, but mostly a little more. So I paid about 83 grand, twelve years ago, since then, prices seemed about the same, till a couple of years ago, now the price seems to be plummeting. Folk are offering me 40 grand now, before looking.

 

[AdeOlly]

This weekend while in the marina office I picked up a 2008 MBM and was suprised to see the size of the depreciation since September 2008 to now.
It seems that most makes have dipped by approx 20% ( some even more) in only 3 years.
However when I looked at a 2001 MBM, the difference from 2001 to 2008 seemed very small, just a few %.
I have to say that I didn't enter the boating market till 2009 so this depreciation I'm referring to hasn't affected me at all and without the depreciation I wouldn't have been able to afford the boat I'm about to buy in a few weeks.
I somehow feel the people that bought prior to 2008 will be taking a big hit when they sell.

The peeps we bought the Jeanneau from in September lost nearly 30% of their money in their three years of ownership.......

 

[henryf]

What has interested me is the fact that new boat prices have risen so much in a supposed recession. Pre Vat the Princess 42 list price has risen exactly 25% since we bought in 2007 and current prices. It doesn't help that Vat has gone up 2.5% either on top of that.

Henry

 

[Deleted User YDKXO]

What has interested me is the fact that new boat prices have risen so much in a supposed recession. Pre Vat the Princess 42 list price has risen exactly 25% since we bought in 2007 and current prices. It doesn't help that Vat has gone up 2.5% either on top of that.

Henry

I don't know whether anybody saw it but there was a boat test in MBY recently which happened to mention that new boat prices have risen at double the inflation rate over recent years which I found astonishing. Yes I know that boats are loaded with more equipment these days and the finish is better but you would have thought that boatbuilders would have more than offset that with continuing production efficiency savings. Certainly in other industries that is the case and I'm not sure why the boat building industry appears to be so grossly inefficient and, yes, I know boat building is still very much a cottage industry. I know its not a direct comparison but I bought a new BMW 5 series in 1996 for about £30k. Today, you can still buy a new BMW 5 series for about £30k despite the recent plunge in the value of Sterling and the car will be infinitely better than a 1996 model

 

[Nautical]

Just to put another twist on it, I would suggest that retail prices have been inflated to allow for the larger discounts you can now get if you haggle to hell and back. 25% discount is not unheard of on production boats these days. Years ago 5% was a huge discount on a sought after model. Then the recession came and everything went off a cliff so the only way to move stock was to discount, discount and then some.

Its all horses for courses. People have got used to the discounting idea and think they are getting a fabulous deal, actually your depreciation (assuming you are selling back through a dealer or broker who knows the score) will be based on what the average purchase price was around the time you bought your boat. Certainly on some models the 20% VAT is wiped off the value the second you take title and then add another 10% a year if its a bit of a slow mover. In four years its worth half what you paid or certainly against the retail price at the time.

Boat builders / dealers are (contrary to common belief ) not entirely stupid, discounts are the order of the day so they are allowing margins to reflect that or to allow bigger numbers on the PX, anyway to persuede you that you are getting a fabulous deal. The price to build is fixed more or less, engines cost what they cost, resins cost what they cost etc etc and labour is fairly fixed. The only way to fiddle the numbers at the retail end is too inflate and then discount or give a better number on your PX than the other guy.

 

[Deleted User YDKXO]

Just to put another twist on it, I would suggest that retail prices have been inflated to allow for the larger discounts you can now get if you haggle to hell and back. 25% discount is not unheard of on production boats these days. Years ago 5% was a huge discount on a sought after model. Then the recession came and everything went off a cliff so the only way to move stock was to discount, discount and then some.

Yes, I imagined that would be the case. Some of the discounts I heard being bandied about at the recent LIBS show could never have left room for even modest dealer and manufacturer margins so I assumed that list prices were being inflated to reflect this. I think though that this is a self defeating policy because high list prices must put some buyers off from even thinking about buying a new boat, especially those who are uncomfortable about haggling for discounts. Also, it leaves some buyers wondering whether they achieved as good a deal as they could have done, had they pressed harder and this leads to dissatisfaction with the new boat buying process. Somebody has to bite the bullet and regularise the list price/discount structure otherwise this is a never ending spiral

 

[henryf]

I was going to post that I suspected some of the increase was to counter the increase in Vat. "Don't worry sir we'll do the vat at 17.5% and cover the extra ourselves."

I do have actual figures for my boat because we discussed a brand new P42 at the boat show so I know what cash figures are for 2007 and 2012. In real terms they have increased by just under 20%.

Henry

 

[gjgm]

It might also be that RPI/CPI isnt exactly typical of boat construction , as there are no tomotoes involved.
Maybe the cost of resin and fibreglass would be a better index.

 

[Deleted User YDKXO]

I do have actual figures for my boat because we discussed a brand new P42 at the boat show so I know what cash figures are for 2007 and 2012. In real terms they have increased by just under 20%.

Considering that 2007 was the penultimate boom year for the industry and therefore you would assume that selling prices were relatively high, thats a helluva increase considering there's a recession on. I wonder if there's another factor here too. With Sterling having depreciated 25-30% against other major currencies, maybe the Brit builders have deliberately pumped up their Sterling prices knowing that they'll still undercut their European competition? I realise that a depreciated exchange rate works both ways in that some of the material costs in building a boat will have increased accordingly.

 

[Nick_H]

I realise that a depreciated exchange rate works both ways in that some of the material costs in building a boat will have increased accordingly.

I think that's probably more of the issue, as GBP fell sharply against euro, dollar and yen. I seem to recall that the resins and matting come mostly from China (RMB is pegged to the dollar), engines from Sweden/Germany/US, lots of mechanical stuff from Italy, and obviously lots of other stuff from outside the UK.

If materials are half the cost of a boat (no idea, that's just a guess), then a 20% average currency shift would account for half the increase Henryf mentions. You can also add steel and oil price rises, as lots of the materials for boats are either petrochemical or steel based.